Health Care Providers Need a Value Management Office

Many health care organizations today are striving to deliver better patient outcomes at lower cost and to be rewarded for accomplishing both. Most have begun this journey with pilot projects to obtain valid measures of outcomes and cost for one or two medical conditions. They implement process improvement and standardize care pathways from a patient’s initial office visit through all aspects of treating the condition, and then explore offering new value-based payment models, including bundled payments, for those conditions. To accelerate the dissemination and adoption of this value agenda for many more medical conditions, leaders should now consider establishing a new central office to oversee the creation of all the capabilities and information for such initiatives.

A “value management office” can greatly enhance an institution’s ability to improve outcomes and costs across the enterprise. At a minimum, it can serve as a center of excellence to assist decentralized clinical units in outcomes and cost measurement and management, set priorities for continuous improvement projects, facilitate the creation of value-based payment models with insurers and employers, and ensure that new information technology platforms are aligned with the value agenda.

While leaders of many care organizations may be fearful that a new centralized staff function would add to corporate overhead and bureaucracy at a time when they are trying to reduce expenses, becoming adept at the delivery of value-based care requires capabilities that provider organizations currently lack. It makes much more economic and operational sense to create and leverage a central cadre of professionals than to ask each clinical unit, on its own, to acquire such expertise. Staffed with dedicated professionals armed with the requisite skills, experience, and credibility, a central group can accelerate the realization of value improvements — better outcomes, more efficient processes, lower costs, and aligned payment models — across the organization.

MD Anderson Cancer Center established its version of a value management office, the Institute for Cancer Care Innovation (ICCI) in 2008 with Thomas Feeley, a senior anesthesiologist and a coauthor of this article, as its head. ICCI now has five full-time employees with expertise in analytics and project management and three part-time graduate students. In addition, it appoints faculty and staff from MD Anderson’s 11 cancer center practice units as associates when they work on ICCI projects.

ICCI serves as a center of excellence for measuring the outcomes that are most important for patients, significant for clinicians, and suitable for value-based reimbursement contracts. In 2010, when MD Anderson decided to introduce time-driven activity-based costing, a method for measuring costs of treating a patient’s medical condition across a cycle of care, the ICCI provided the leadership and resources to develop the capabilities for a pilot project and then to scale the approach across the institution.

ICCI’s role subsequently expanded to integrate outcome measurement and reporting into MD Anderson’s new electronic-medical-records system. ICCI is now playing an important role in providing outcomes and cost data to MD Anderson’s enterprise data warehouse, which will integrate multiple types of clinical and financial data into clinical care and research. ICCI also led the negotiations with one of MD Anderson’s largest private insurers to adopt the first cancer-care bundle in the United States.

The Hospital for Special Surgery (HSS) established its Value Management Office in 2014 to institutionalize continuous value improvement and provide greater coordination and resource focus for its value agenda. HSS appointed Dr. Catherine MacLean, a coauthor of this article, to be its first chief value medical officer. A clinician by training, she had previous experience managing quality-improvement programs at a large national payer. Her mission in her new role: To coordinate and lead efforts for value measurement and improvement throughout the organization.

The Value Management Office’s initial projects are focused on three key areas:

Improve the collection of outcome measures. HSS has a long history of measuring and improving patient outcomes, including eight institutional registries for specific procedures among more than 136,000 patients. The Value Management Office promoted the development of shorter and more usable measuring instruments for collecting outcomes data by HSS researchers.

One example is in the area of patient-reported outcomes. HSS’s recently validated “HOOS JR” and “KOOS JR” contains three-dozen-fewer questions than the extensive standard metrics on the Hip Disability and the Knee Disability Osteoarthritis Outcome Scores (HOOS and KOOS) — two widely used instruments for measuring pain and function for patients with hip and knee arthritis.

The office then conducted a pilot project in which patients used a mobile application to complete the HOOS JR and KOOS JR surveys. The mobile app also tracked patients’ daily steps as an additional indicator of their level of activity. HSS researchers are now evaluating the relationship of such “passively” collected data and patient-reported-outcomes measures in the hopes of further streamlining the collection of important functional patient outcomes.

Integrate quality data into care delivery. The Value Management Office is integrating the collection and reporting of process and outcome measures into real-time clinical care. Many patient-reported outcomes that were traditionally collected only for registries will be introduced into patients’ electronic medical records for clinicians to use in much the same way as lab tests.

Physicians will see these scores, along with information on patients’ preferences, when they meet with patients. This information will help clinicians determine how likely treatments are to be successful and, with the patient, choose the treatment most aligned with the patient’s goals. After surgery, these same tools will be used to direct the intensity and duration of rehabilitation needed to attain the functional goals set by the patient. In addition, institution-wide outcome dashboards that previously just showed metrics required by external agencies will display the patient-reported outcomes. The internal reporting of outcomes allows clinical teams to identify care practices that are working to achieve patient-desired outcomes and those that are not so their processes and procedures can be changed to optimize those outcomes.

Expand from process excellence to population management. HSS has multiple groups that drive efficiencies in discrete parts of a patient’s episode of care (i.e., all the services involved in treating a patient for a particular condition within a specified period). For example, the Operational Excellence group focuses on operating room efficiencies and improving clinician workflow, while the Care Management group concentrates on surgical patients’ immediate post-discharge period. The Value Management Office now partners with these different groups to realize efficiencies across the full episode of care. It has begun a new program to manage the activities for patients’ preventive and follow-up care, which will be the foundation for new bundled-payment programs for treating musculoskeletal diseases within defined populations. HSS deliberately chose a chief value medical officer with prior experience in a payer organization to promote a more informed approach when engaging with private payers and employers around value-based reimbursement models.

Institutions should house the expertise needed to produce superior outcomes for patients and truly bend the cost curve in a central group as MD Anderson and the Hospital for Special Surgery have done. Doing so will help units throughout the organization move far more rapidly from a world that rewards the volume of procedures that are performed to one that rewards the delivery of superior patient value.

Catherine H. MacLean, MD, is the chief value medical officer at Hospital for Special Surgery and an adjunct natural scientist at the RAND Corporation.

Alexander Dresner is the co-head of the Office of Value Management at Hospital for Special Surgery.

Derek A. Haas is the CEO of Avant-garde Health, a health care technology and analytics company that improves quality and profitability across the care continuum.

Thomas W. Feeley, MD, is the Helen Shafer Fly Distinguished Professor of Anesthesiology and head of the Institute for Cancer Care Innovation at the University of Texas MD Anderson Cancer Center in Houston. He is also a senior fellow at the Institute for Strategy and Competitiveness at Harvard Business School.